Tim Beyers and I are at it again. We have our Dueling Fools caps on, and the company in our crosshairs this week is market darling Apple (NASDAQ:AAPL). Beyers is bullish. I am bearish.

That's right, Apple fans. I can already feel your venom.

Stepping into the bear's den seemed crazy at first. I'm a customer. A casual stroll through my home will reveal that I have a MacBook, three iPhones, and a handful of iPods in various stages of disrepair.

However, the deeper I decided to dig, the easier it became for me to get down on the stock's near-term potential. So grab a shovel and come along.

It's all about the smartphones, baby
The market cheered last week's quarterly report. Apple walloped expectations, the way it typically does. However, I wasn't entirely comfortable with a company that sells iPhones like crazy but still scores year-over-year gains of just 9% and 15% on the top and bottom lines, respectively.

Sure enough, the rest of Apple's report stunk up the joint.

  • Mac desktop sales fell 22%.
  • The seemingly unsinkable MacBooks took a 12% top-line hit.
  • Even the once mighty iPod suffered an 8% decline in sales.

Apple's high-end computers took quite a hit. The company did manage to move a few more iPods, though clearly at lower price points.

The iPhone is the one thing that's going right at Apple. Since Apple records its iPhone revenue over a 24-month period -- the way it does with the Apple TV, hee-hee -- the company has a lot of juicy income-statement goodness baked into its future.

However, if I'm buying Apple only as a smartphone play -- since the rest of its businesses are in varying states of decline -- why don't I just buy market leader Research In Motion (NASDAQ:RIMM) as a pure play?

After all, instead of revenue and earnings gains of 9% and 15%, respectively, at Apple, RIM scored year-over-year gains of 84% and 25%, respectively. And while Apple posted a sequential decline in iPhone units, RIM posted a healthy sequential increase in both shipments and net new subscribers.

Sure, RIM's quarter ends in February, so it includes the cheery month of December. However, BlackBerrys aren't exactly stocking stuffers. Go back a year, and you'll find that smartphone shipments at RIM were higher in the March-through-May quarter relative to the previous one that included December.

In the end, Apple is trading for 24 times this year's projected profitability and 21 times next year's target. The faster-growing RIM, on the other hand, is fetching multiples of just 23 and 16 times, respectively.

The clear investment choice between the two isn't even close. And it's not Apple.

Making things even more interesting is that as RIM widens its smartphone lead over Apple, companies such as Google (NASDAQ:GOOG) and Palm (NASDAQ:PALM) are nipping hungrily at the iPhone's heels.

While my Apple Store gently weeps
This isn't an argument on which smartphone stock is the better choice for your portfolio, so let's move on to Apple's chain of stores. They're cool, crowded, and probably not doing as well as you think.

Retail sales at Apple were climbed by just $20 million, or 1%, this past quarter -- practically unchanged. The numbers may not seem all that damaging, but keep in mind that the number of Apple Stores out there has expanded by 21% -- from 208 to 252 -- over the past year. Brutal comps, right?

The bigger concern is that Apple apparently hasn't learned the lessons that other premium retailers have sadly lived out.

  • Premium family-entertainment giant Disney (NYSE:DIS) overbuilt its Disney Store chain. It had to sell it to Children's Place before eventually buying back a much smaller version of the mall-based chain.
  • Premium barista haven Starbucks (NASDAQ:SBUX) is now closing down stores and lowering prices.

You can't be both a marketer of upscale merchandise -- and clearly, there is an Apple premium out there, especially in the computing space -- and a mainstream merchant.

You know who realizes this? Microsoft (NASDAQ:MSFT). The world's largest software company has made a ton of marketing and operating system blunders in the past, but it's really striking a nerve with its new ad campaign that promotes the value of Windows-powered machines to everyday consumers.

Microsoft has been a comical competitor against Apple's iPod, but it knows it can hit Apple in the computing gut by forcing it to either slash prices to reach the masses in this netbook-happy world or retreat to its niche of well-to-do loyalists. But it can't do both. You don't sell Kobe beef burgers at Mickey D's, after all.

Other Apples for your eyes:

Discover the flipside to Rick's bearish argument against Apple with Tim's bullish rebuttal.

Google is a Motley Fool Rule Breakers recommendation. Apple, Disney, and Starbucks are Motley Fool Stock Advisor selections. Walt Disney and Starbucks are Motley Fool Inside Value recommendations. The Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz can't imagine life without his Apple gear, but he has no problem avoiding Apple at these prices. He owns no shares in any of the stocks in this story, save for Disney. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.